DTSA Changes Employers’ Contract Language

Defend Trade Secret Act Changes Employers’ Contract Language

If you are an employer, hopefully you already knew that the Defend Trade Secrets Act (“DTSA”) became effective on May 11th, 2016.  The DTSA provides federal law protection for trade secrets in addition to the protection that already exists at the state level under the Uniform Trade Secrets Act (“UTSA”) as adopted by most states.  While similar to the UTSA in many ways, the DTSA includes a significant provision: for employers to collect statutory damages under the DTSA against an employee who misuses its trade secrets, they must make employees aware of the DTSA’s protections for whistleblowers.

One way to comply with this requirement is to simply insert the following language into employment agreements and company handbooks:

“In accordance with the Defend Trade Secrets Act of 2016, I understand that:

An individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding.

Further, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the employer’s trade secrets to the attorney and use the trade secret information in the court proceeding if the individual: (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.”

Stay tuned for another requirement unique to Kansas… next time on the Blog Posts.

- James Cole



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